Overseas Union Enterprise (OUE), controlled by Indonesia’s Lippo Group and Malaysian tycoon Ananda Krishnan to buy Grangeford

Overseas Union Enterprise (OUE), controlled by Indonesia’s Lippo Group and Malaysian tycoon Ananda Krishnan, is believed to have inked a conditional put-and-call option to buy The Grangeford for $592 million or $1,810 per square foot (psf) of potential gross floor area, say sources.

The $1,810 psf per plot ratio (ppr) unit land price is inclusive of $87.8 million that the developer will have to pay the state to top up the site’s remaining 66-year lease to 99 years.

CB Richard Ellis (CBRE) is brokering the deal.

The put-and-call option is subject to approval for the collective sale by owners controlling at least 80 per cent of share values in the District 10 property along Grange Road, just opposite the Indian High Commission.

BT understands that so far, approval from owners with 75 per cent share values has been secured. It will take another 10 owners to give the nod before the 80 per cent threshold is reached. In all, the development has 193 units. The option is valid for four weeks, BT understands.

The option can be exercised by both sides. That means that upon the minimum 80 per cent consent level being secured, either OUE can make the vendors sell The Grangeford or the vendors can make OUE buy.

The $1,810 psf ppr top price achieved for The Grangeford is the highest achieved on the island for a 99-year leasehold residential site. For a freehold site, the current benchmark, set late last week, was for SC Global’s acquisition of The Ardmore for $2,337 psf ppr.

The $1,810 psf ppr OUE has offered for The Grangeford also surpasses the $1,735 psf ppr it offered in December last year for the freehold Parisian at Angullia Park.

Based on OUE’s bid price for Grangeford, market watchers reckon the breakeven cost for a new condo on the site could be around $2,400 to $2,500 psf. OUE is part of the Lippo Group, which has demonstrated a flair for developing high-quality residential projects like Newton One and Trillium.

Market watchers reckon the $1,810 psf ppr offer by OUE will also be closely watched by owners of the next door Horizon Towers, also a leasehold estate and which was sold for $800 psf ppr earlier this year and which is currently mired in uncertainty.

As for The Grangeford, if the deal with OUE is finalised, owners of two-bedroom units will receive $2.7 million per unit (or $2,302 psf based on the existing strata area of the apartment), while owners of three-bedders will walk away with $3.43 million or $1,955 psf. Market watchers note that based on the sales proceeds of $1,950 to $2,300 psf of existing strata area, The Grangeford’s sellers have a good spread of replacement properties in the vicinity to pick, including The Imperial, Cosmopolitan and Trillium. Property agents reckon that resale units in these developments - all of which are freehold and new - can be bought for $1,700 to $2,150 psf range.

The Grangeford has a land area of 130,982 square feet and under Master Plan 2003, is zoned for residential use with a 2.8 plot ratio and a 36-storey height limit. However, the assumption being made is that the authorities will allow a new development on the site to retain the current existing gross floor area of 375,466 sq ft, which reflects a 2.87 plot ratio.

CBRE has previously said that even if the developer builds an additional 10 per cent gross floor area allowed for balconies, no DC is payable as the development baseline is high - at 547,926 sq ft or an equivalent plot ratio of 4.18.

The Grangeford’s reserve price has been revised upwards several times since last year from $280 million in 2006 to $350 million in Q1 this year to $550 million when the latest expression of interest was launched in April. That exercise closed in late May attracting four bidders, who were invited to resubmit bids. OUE emerged as the highest bidder.

Source: The Business Times, 22 June 2007